Americans aren't good at saving money. The average amount of disposable income — income less taxes, not to be confused with discretionary income — saved has dropped from 11% in the 1980s to 1% before the start of the current recession. A graph is appropriate here:
I'm not some anti-materialist nazi, but that downward march is the increased confusion that Americans have between "wants" and "needs". Sure, real wages have decreased over this time period, but not nearly at the rate that savings has slumped.
The uptick for 2009? That's the just-released data for January of this year which pegs the rate at 5%, up from 1.8% in 2008 and 0.5% the previous year. August of 2005 even featured a rate of negative 2.7%, a feat matched only by the -0.2% rate in 2001. Though I would generally argue that people thinking about their future rather than instant gratification is a wonderful change, increased saving isn't what an economy needs to break out of a recession.
Sources:
- Personal Saving Rate, January 1959 through January 2009 from the St. Louis fed
- The same data as a Numbers spreadsheet (zip) and Excel spreadsheet, with annual averages
I totally agree. It's unfortunate, however, that the current economic factors not only require that people spend more, but that they also save more. The housing market being in such a slump results in a lot of people with good credit suddenly able to get a great rate on a nice house for much less than they needed before. Putting that extra effort in saving monies gets them there faster. The threat of losing jobs (ADP noted yesterday that something like 697000 jobs were shed in the private sector in February alone) is a huge concern and a major catalyst for hording cash. It also doesn't help that no one trusts the banks with their money anymore.
You're absolutely right and truthfully it is hard to fault anyone for saving more right now since that is certainly the prudent course of action. I don't think everyone is completely off the hook, though, because the historical rate makes it clear that most haven't been saving for many years.